Peyto Exploration & Development Corp. · TSX:PEY
Peyto Exploration & Development — Shareholder Meeting (May 2010)
37 slides from Peyto Exploration & Development's shareholder meeting presentation, May 19, 2010
Slide 1: AGM May 19, 2010
AGM May 19, 2010 TSX: PEY.UN www.Peyto.com Current Distribution: $0.12/month 120,982,602 units outstanding 10.5% yield on May 17/10 closing
Slide 2: Corporate Governance
Corporate Governance • “We will be candid in our reporting, emphasizing the pluses and minuses important in appraising business value. Our guideline is to tell you the business facts that we would want to know if our positions were reversed.” • “Our policies and communications will be designed to en
Slide 3: The Peyto Strategy: 11 Year Track Record
The Peyto Strategy 11 Y Year T Track kRRecord d Prospect Generation Reserves Growth NAV Growth Profit Sharing (BCFe) (NPV5 Debt Adj/Unit) 1999 2000 2001 1999 1999 2002 2000 2000 2003 2001 2004 2001 2002 2005 2002 2003 2006 2003 2004 2007 2004 2005 2008 2005 2006 2009 2006 2007 2008 2007 2008 2009 20
Slide 4: The Peyto Strategy: Compound Annual Total Return
Com mpound Annual TTotal Return L 0% 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% Largest Osisko Exploration Dec‐99 heaton Corp. Silver Wh Source: BMO Capital Markets Peyto Enerrgy Trust Pacific Rubialees Energy Silvercorp Meetals Inc. Thompson Creek M Metals Co Dec‐00 FNX Mining Com mpany Calloway REIT
Slide 5: The Peyto Strategy: Margins Matter
The Peyto Strategy M i M Margins Matter tt 100% 90% 80% enue 70% Margin as % of Reve 74% Operating 60% Margin 50% 40% 30% 56% Profit Margin 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Earnings Cashflow Field Netback 5 6/4/2010
Slide 6: The Peyto Strategy: Margins - Industry Comparison
The Peyto Strategy M i - Industry Margins I d t Comparison C i Q4 2009 Operating Margin 80% 70% 60% 50% 40% 30% 20% 10% 0% 6 Operating Margin – Cashflow divided by revenue (both before hedging effects). 6/4/2010
Slide 7: The Peyto Strategy: High Returns on Capital and Equity
The Peyto Strategy Hi hR High t Returns on C it l and Capital dE it Equity 60% $250 50% 41% $200 Ave ROE 40% $150 30% 21% Ave $100 ROCE 20% $50 10% 0% $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Return On Capital Employed (%) Return On Equity (%) Earnings ($M) Return on Equity (ROE) is
Slide 8: Peyto's Organic Production Growth
Peyto’s Production O Organic i PProduction d ti G Growth th 200,000 $1,200 180,000 $1,000 160,000 ns $MM 140,000 Cumulattive distribution $800 Converted C t d uction (mcfe/d) 120,000 to a Trust 100,000 $600 80,000 Produ $400 60,000 40,000 $200 20,000 - $- Gas daily (mcf/d) Gas, NGL's & Oil Oil, dail
Slide 9: Peyto's Deep Basin Focus
Peyto’s Deep Basin Focus G Generall A Area off O ti Operations M Map • 227,000 net acres R10 R8 R6 R4 R2W6 R27 R25 •R235 operated R21 gas plants R19 R17 R15 R13W5 T64 • 750 km pipelines T64 • 600 producing wells C G F F CF F C F F F F F GG C Cutbank • 23,500 boe/d F W C FC T62 F C F F T62 C Chicken
Slide 10: Peyto's Deep Basin Focus: Multiple Vertical/Horizontal Targets
Peyto’s Deep Basin Focus M lti l V Multiple Vertical ti l /H /Horizontal i t lTTargets t Sundance Area Reservoirs 12 10 6/4/2010
Slide 11: Tight Gas Resource Plays: Horizontal MSF Pilot Projects
Tight Gas Resource Plays H i t l MSF Pil Horizontal Pilott P j t Projects 11 6/4/2010
Slide 12: Cardium Resource Play: Horizontal MSF Pilot #1
Cardium Resource Play H i Horizontal t l MSF Pil Pilott #1 C di Cardium Gas G Fairway F i Pilot Project #1 Sundance Cardium • >4,000 sq miles • up to 65 TCF Gas in Place1 • ~ 2-3 TCF developed to date E Peyto Cardium Rights • >400 sq miles (gross) • 1.0 TCF developed to date (vertical wells only)2 D
Slide 13: Cardium Type Log and Reserves
Cardium Resource Play C di Cardium T Type L Log and dRReserves Volumetric Reserves AREA(Ha)= 256 (1 section) 23m Gross thickness H(m)= 15 15m Net Pay (using POROSITY(%)= 9 6% porosity cutoff) SW(%)= 18 TEMP.(Deg.C)= 80 PRES.(kPa)= 19000 Z= 0.8 Recovery Factor(%)= 85 Surface Loss(%)= 7 OGIP(BCF)= 19.
Slide 14: Pilot Project #1 - Sundance Cardium
Cardium Resource Play Pilot Project #1 – Sundance Cardium R23 R22 R21 R20 R19W5 W FFUUF F A U F U FL FU G CG F F G G C W F F C F FF F F F F D24 F U F U 21 F F C F 24 G F 19 U F F W E 24 L G G G UV 20 21 F 22 23 GV F F F F FC 21 UF UF G A 19 20 22 23 22 23 24 19 20 21 22 23 A 20 F F U F G N Cardium P
Slide 15: Normalized Cardium Production: Vertical vs. Horizontal
Cardium Resource Play N Normalized li d CCardium di P Production d ti – Vertical V ti l vs. H Horizontal i t l Average Vertical Last 10 years 10,000 Average Vertical Last 5 years 2-5 times i i i l rate initial on (mcfe/d) 1,000 Dailyy Gas Productio 100 Ave Cardium Vertical ‐ Last 10 yrs (00/04‐10‐05
Slide 16: Cardium Economic Comparison: Vertical vs. Horizontal
Cardium Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l 8,000 Ave Cardium Vertical ‐ last 5 yrs (00/13‐20‐055‐22W5/0) 7,000 00/02‐15‐055‐21W5/0 Cardium HZ (1329m) 00/08‐22‐055‐21W5/0 Cardium HZ (1043m) 6,000 00/13‐06‐055‐21W5/0 Cardium HZ (967m) High Hz 00/03‐16‐055
Slide 17: Cardium Horizontal Development: Potential Locations
Cardium Horizontal Development P t ti l L Potential Locations ti R9 R7 R5 R3 R1W6 R26 R24 R22 R20 R18 R16W5 F CF F FFF G CE G JF G FC ED F AEF AF C F G FF FCF KKGF CIK CGFCF CF D CL GC G FGFA G E G G G G CG L GF CG ECF F GF CI EF CJ CE EEE L S I E G J EEG EE F LLLG G GG G ILK LF F C FF G GG G EG K F
Slide 18: Notikewin Resource Play: Horizontal MSF Pilot #2
Notikewin Resource Play H i Horizontal t l MSF Pil Pilott #2 Peyto Notikewin Mineral Rights 18 6/4/2010
Slide 19: Notikewin Type Log and Reserves
Notikewin Resource Play T Type L 1 Log 1-20-54-22W5 20 54 22W5 28m Gross Pay Volumetric Reserves 19m Net Pay AREA(Ha)= 256 (1 section) H(m)= 19 23m Gross Pay POROSITY(%)= 8 16m Net Pay SW(%)= 35 TEMP.(Deg.C)= 96 PRES.(kPa)= 32000 Z= 1.02 Recovery Factor(%)= 85 Surface Loss(%)= 4.5 OGIP(BCF)= 22 RGIP
Slide 20: Pilot Project #2 - Greater Sundance Notikewin
Notikewin Resource Play Pilot Project #2 – Greater Sundance Notikewin R23 R22 R21 R20 R19W5 U WF FDV U U F C G F F F W G E Peyto Pine Ck 14-7-56-17W5 L GG FG IC F F FF FF F U F F C G UV F G F F FVU F F F UG F F G F FF F UF UF F I EU G E G U C F F C C FF E F F C V F F U FU F CU F C F FU F F FC CU C F
Slide 21: Normalized Notikewin Production: Vertical vs. Horizontal
Notikewin Resource Play N Normalized li d NNotikewin tik i P Production d ti – Vertical V ti l vs. H Horizontal i t l 10,000 Average Vertical Notikewin 00/08‐03‐056‐21W5/0 00/06‐27‐054‐22W5/2 Notikewin HZ (943m) 00/10‐15‐054‐22W5/0 Notikewin HZ (796m) Daaily Gas Producction (mcfe/d) 00/14‐03‐055‐21W
Slide 22: Notikewin Economic Comparison: Vertical vs. Horizontal
Notikewin Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l Average Vertical Notikewin 00/08‐03‐056‐21W5/0 10,000 00/10‐15‐054‐22W5/0 00/10 15 054 22W5/0 Notikewin HZ (796m) Hi h Hz High H 00/06‐27‐054‐22W5/2 Notikewin HZ (943m) 8,000 00/14‐03‐055‐21W5/0 Notikewin HZ
Slide 23: Wilrich Resource Play: Horizontal MSF Pilot #3
Wilrich Resource Play H i Horizontal t l MSF Pil Pilott #3 Nosehill Project Area Peyto Wilrich Mineral Rights 23 6/4/2010
Slide 24: Wilrich Type Log and Reserves
Wilrich Resource Play T Type L 7 Log 7-5-56-20W5 5 56 20W5 Volumetric Reserves AREA(Ha)= 256 (1 section) JET 2825 H(m)= 16 FRAC 23m Gross Pay (-1578.4) POROSITY(%)= 8 16m Net Pay SW(%)= 35 TEMP.(Deg.C)= 98 PRES.(kPa)= 24000 Z= 0.92 Recovery Factor(%)= 85 Surface Loss(%)= 4.5 OGIP(BCF)= 15 RGIP RAW(B
Slide 25: Pilot Project #3 - Nosehill Wilrich
Wilrich Resource Play Pilot Project #3 – Nosehill Wilrich R21 R20 R19W5 F G 25 F U 29 28 27 F 26 30 29 F28 K 27 26 25 30 29 28 27 26 F F C Peyto 14-05-56-20W5 F G J I EE E F F G F F G G C E Wilrich Horizontal F F CG E IC W LGG F G 20 F F C 21 UF 22 23 24 19 20 21 22 23 24 GGUV 19 20 21 22 23 On Prod
Slide 26: Normalized Wilrich Production: Vertical vs. Horizontal
Wilrich Resource Play N Normalized li d Wilrich Wil i h Production P d ti – Vertical V ti l vs. H Horizontal i t l 10,000 Average Wilrich Vertical 00/02‐26‐055‐20W5/0 00/13‐25‐055‐20W5/0 Wilrich HZ (1500m) 00/12‐05‐056‐20W5/0 Wilrich HZ (1334m) 00/14‐05‐056‐20W5/0 Wilrich HZ (640m) Daily Gas Producc
Slide 27: Wilrich Economic Comparison: Vertical vs. Horizontal
Wilrich Resource Play E Economic i CComparison i – Vertical V ti l vs. H Horizontal i t l 9,000 Average Wilrich Vertical 00/02 00/02‐26‐055‐20W5/0 26 055 20W5/0 8,000 00/13‐25‐055‐20W5/0 Wilrich HZ (1500m) High Hz 00/12‐05‐056‐20W5/0 Wilrich HZ (1334m) 7,000 00/14‐05‐056‐20W5/0 Wilrich HZ (640m) Ave
Slide 28: Wilrich Horizontal Development Opportunities
Wilrich Resource Play H i Horizontal t lDDevelopment l tOOpportunities t iti Peyto HZ Wilrich Locations (138) HZ Wilrich On Production (2 Gross, 1.5 net) HZ Wilrich PUD Locations ((19 9ggross, oss, 18.70 8 0 Net) et) HZ Wilrich PA Locations (1 gross, 0.75 Net) HZ Wilrich Possible Locations (116 Gros
Slide 29: Other Resource Plays: Horizontal MSF Pilot #4 and on
Other Resource Plays H i Horizontal t l MSF Pil Pilott #4 and d on 29 6/4/2010
Slide 30: Technical Challenges: Horizontal MSF Directional Drilling
Technical Challenges H i Horizontal t l MSF Di Directional ti l Drilling D illi Geo-steer down to Geo-Steering & Drilling Hazards avoid popping out of sand. Once out is difficult to get back down. drape Geo-steer down to fi d sand find d if crossed d small fault Geo-steer down to find sand using 3D
Slide 31: Logistical Issues: Summer vs. Winter Completions
Logistical Issues S Summer vs. Wi t C Winter l ti Completions 31 6/4/2010
Slide 32: Tight Gas Resource Plays: Our Conclusions
Tight Gas Resource Plays H i Horizontal t l MSF Pil Pilott P Projects j t – Our O Conclusions C l i • It’s still early • Results so far are veryy encouraging g g • Optimization work yet to happen • More zones to be tested • Ability Abilit tto operate t in i summer a bi big plus l • Returns for Peyto
Slide 33: Peyto Full-Cycle Gas Supply Cost
Turning Upside into Value P t Full-Cycle Peyto F ll C l G Gas S Supply l CCostt $10 $10 s Price ($/mcffe) cf) $8 $8 s Price ($/mc $6 $6 Cnd$/mcf Before AECO Monthly Gas Realized Gas Tax Profit (46% ave) $4 $4 PDP FD&A Peyto R G&A Interest G&A, I t t $2 $2 Royalties Op Costs (incl. Trans.) $- $ $- $
Slide 34: Full Cycle Supply Cost Industry Comparison
Full Cycle Supply Cost I d t Comparison Industry C i 2009 Low Cost Producer 100% s Cash+FDA PP ($/boe) / Tottal Revenue 90% 80% 70% 60% boe) 50% ($/b 40% 30% 20% Total Costs 10% 0% 34 6/4/2010
Slide 35: 2010 Outlook
2010 Outlook Increased Capital Budget • Capital p Expenditures p ($225 - $ ($ $250 million before DRC)) • Drill & Re-Enter New Gas Locations (Hz and Vert.) • Expand Gas Gathering & Processing Infrastructure • Expand Undeveloped Inventory • Evaluate Impact of New Technology on Other Zones • Take Adva
Slide 36: 2011 Outlook: Evolving Corporate Structure
2011 Outlook Evolving Corporate Structure $500 Peyto Exploration Peyto Energy Millions Peyto Energy and Development Corp. Trust $450 Corp. $400 Growth + Growth E&P Growing Trust Optimized Profit Income E&P Sharing $350 ? $300 $250 $200 $150 $100 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 20
Slide 37: Advisory Regarding Forward-Looking Statements
Advisory R Regarding di F Forward-Looking d L ki St Statements t t This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing
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